GPO shops booted for mystery tenant

Dozens of retailers are being kicked out of their shops in the historic GPO building to make room for a major international retailer.

The owner of the $81 million GPO centre, the Industry Superannuation Property Trust, confirmed on Wednesday that the "majority" of retailers in the centre would be asked to move out over the next six months. However, ISPT chief executive Daryl Browning would not confirm who would be moving into the building, which has been plagued with vacancy and foot traffic problems since it opened in 2004.

Retailers are uncertain whether they will be adequately compensated for having their lease agreements broken. Photo: Pat Scala

"It will continue to be in retail use. That's all I can say," Mr Browning said.

Industry sources told Fairfax Media that the prized new tenant was most likely technology giant, Apple. However, there is also speculation it could be Swedish fashion chain H&M or US retailer Abercrombie & Fitch. H&M announced last week it would open its first Australian shop next year.

"There are three large-space international retailers currently looking for quality space in Melbourne – Apple, H&M and Abercrombie and Fitch," one source said. "If I were a betting person, I would say it's probably Apple."

Mr Browning said on Wednesday that more than one retailer would occupy the building.

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GPO retailer Charlie Digby, from womenswear label Digbys, said he was disappointed he was being kicked out of his first floor shop.

He said he received a letter about three weeks ago from centre management informing him that it would not be renewing his lease when it expired on September 30.

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"It basically said we're not renewing your lease and make sure the shop is empty by the end of trading on September 30," he said.

"It was very inconsiderate. They don't tell you anything. The only information we get is through the cleaners."

Other retailers, who did not wish to be named, are uncertain whether they will be adequately compensated for having their lease agreements broken. It is believed many of the original tenants have leases until November 2014.

"We can't get a straight answer at the moment ... but our understanding is we'll get booted in November this year even though our lease is until November 2014," one retailer said.

"They're basically breaking the lease and they'll have to compensate us for that. So we'll see what happens."

Mr Browning said it was currently in talks with all tenants to discuss lease arrangements.

"There are a variety of lease expiries ... We are having discussions with all of them and it might mean compensating some but it just depends," he said.

Other retailers have accused the centre of mismanagement and a lack of marketing that has "killed" the building and that the owners were now being forced to review their retail offering to compete with the new Emporium centre which will open in Lonsdale Street this year.

It is believed that several existing GPO retailers will open new shops at the Emporium, which has secured several key international retailers including Uniqlo and Topshop.

"They are terrified about the Emporium and a duplication of offerings between GPO and Emporium and that's why they're looking to a attract a major tenant," one retailer said.

Mr Browning defended its management and future plans for the GPO. ISPT recently spent $3.5 million renovating the building's facade.

"Some retailers have done very well. Others have struggled," Mr Browning said. "The fact is it clearly needs to refreshed for it to be a sustainable property. Certainly Melburnians love it as a building ... what we're doing is resetting it for the next five to six years."

ISPT bought the building in May 2005 from developers Morry Schwartz and Adam Garrisson, who restored the building following a 2001 fire that badly damaged it soon after they had won a tender to redevelop it into a retail centre.

It is believed the current and previous owners have been restricted by the building's heritage listing. Any further redevelopment is likely to need authorisation from Heritage Victoria.